Proposed luxury tax for L.A. homeowners

April 24, 2008 12:00:00 AM PDT

By Wendy Burch

4/24/2008 DOWNTOWN LOS ANGELES --

If you own a home larger than 5,000 square feet, you may have to pay a luxury tax on your electricity usage.The luxury tax is being proposed as a way to bring in money to prevent laying off city employees.

Los Angeles City Council members met for hours Wednesday to try and come up with some ideas to close the budget gap. The idea generating the most attention was one from City Councilman Richard Alarcón.

Alarcón is proposing a luxury tax on homes that use a lot of energy. The tax would apply to homes that are larger than 5,000 square feet.

Alarcón has asked the Los Angeles Department of Water and Power to draft a plan.

The money generated from the tax would go directly into the city's general fund. The increased revenue would be a way to avoid laying off city employees and increasing fees for city services.

Alarcón says people who use extravagant amounts of energy should have to pay for the luxury of doing such. He says the proposal accomplishes two different objectives: it would add to city revenue and it would also encourage people to live a more environmentally-friendly lifestyle.

The proposal is in the planning stages. There's no indication as to how much the luxury tax would be or how exactly it would be calculated.